Balloon Mortgage

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Balloon mortgages are mortgages that offer a low initial interest rate. This mortgage interest rate is lower than the fixed-rate loans for 5 to 10 years, and then it will require a balloon payment. The balloon payment is the final payment of the loan, and pays off the entire loan balance. Monthly payments are low because the payments for the first 5 to 10 years are paid off at a low interest rate over the total length of the loan, which is usually 30 years.

Pennsylvania Balloon mortgages are often depicted as 5/25 or 10/20 for example. The amortization period is 30 years for either 5/25 (5+25) or 10/20 (10+20), After 5 or 10 years, the entire loan balance becomes due, the balloon payment.

Balloon mortgages are attractive because they offer low interest rates for the initial term of the loan. When the balloon payment is due after the 5 or 10 year period, and the borrower doesn't want to pay off the remaining loan balance, a "reset" is performed and an index plus a margin determines the fixed rate for the remaining loan term.

Call and speak with us today and one of our Loan consultants can guide you toward the best loan option for your needs.